The Best Currency Pairs to Trade in 2023?
Choosing which assets to use in the forex market is not the easiest task, especially for beginners, because even the most popular currency pairs are not always amenable to analysis. Nevertheless, using the most liquid pairs as the base and quoted pairs is the most reasonable option for working on the exchange. Let us find out what aspects one should pay attention to while choosing the best assets to trade, as well as learn the most tradable currency pairs in forex trading.
Things to Consider when Choosing the Best Currency Pairs to Trade
The most popular currency pairs are always characterized by a dynamic trend, which allows for earning the highest return in a short period of time.
The second indicator that affects the popularity is the spread - the commission charged by the broker for each of your transactions when buying or selling currencies.
The third point is the availability of different strategies for the chosen trading instrument, as it is much easier to use someone else's experience than to spend time creating your own trading system.
Besides the time of trading and personal preferences of a trader are also significant. Some people trade only at night, while others prefer the most predictable trading instruments without sharp rate fluctuations.
To choose the most appropriate trading instrument, it is necessary to go through the description of popular currency pairs.
Most Popular Currency Pairs
EUR/USD is the leader among the leaders, it is the euro/dollar that has the greatest liquidity and dynamics, and the rate of this currency pair changes almost every second. Such dynamics open up great opportunities for speculative trading.
The trend is constantly changing its direction, the price is sharply jumping up by a few points, then falling by a hundred points.
The most attractive strategy for this currency pair is breakout trading, it allows you to generate an income due to sharp price changes.
The news trading strategy works great, during one day, some important events can happen at the same time, and your task is to follow them and to catch the moment of your entering the market.
Not unimportant is the lowest spread, from 0.2 in a floating version and from 0.4 in a fixed version, to find out the size of this indicator you can ask your broker.
It is this popular currency pair used for scalping, its small spread allows you to significantly reduce the cost of trading large volumes.
In addition, this currency pair has been traded for several years in a certain price range, which allows traders to easily determine the state of the market.
USD/JPY - dollar/yen is more often used in mid- and long-term trading, this is due to the small commission for the transfer of positions for the next day. There is a large number of trading advisors and robots that allow automated trading precisely for this instrument.
The currency pair rises sharply in value when the dollar strengthens or the Japanese yen declines, it becomes cheaper after a piece of unfavorable news about the U.S. dollar.
You should be especially careful when opening a short position because currency interventions by the Bank of Japan are possible in case of an excessive yen appreciation. At the same time, there is a whole strategy based on these interventions, which are based on the fact that sooner or later, the Bank of Japan will put up for sale a large volume of currency. Consequently, it will bring down the market.
The main activity is observed during the Asian trading session, this is with the opening hours of the financial centers in Japan.
GBR/USD is one of the most popular currency pairs and can be compared to EUR/USD in terms of dynamics because the British pound is very sensitive to all European news, so its rate sometimes moves almost in parallel with the euro.
The pair has a small spread and can be used for trading at short time intervals with the maximum possible lot.
It is preferable to open long (buy) positions if you use strategies that imply rollover to the next day.
AUD/USD is quite a good trading asset, which is ignored by beginner traders. Its rate is perfectly predictable, and you can often expect further price movements depending on the price of gold or agricultural commodities.
Very often it is used for capitalizing on the difference of interest rates according to the strategy "carry trade", which allows getting gains even without any evident change of rates.
Popular currency pairs occupy more than 60% of the total volume of trade on the forex market, but it does not mean that you should trade exactly with these assets. If you wish, you can choose a more appropriate currency pair for you.
Recently, it has also become possible to trade cryptocurrencies on forex using the familiar trader's terminal, which has significantly expanded the opportunities to benefit from this asset.
Particularly popular in this case are:
- BTC/USD - Bitcoin
- XRP/USD - Ripple
- LTC/USD - Litecoin
- ETH/USD - Ethereum
Trading these assets at forex is much more beneficial than at specialized exchanges, because brokers' commissions are much lower, and the speed of transaction execution is much higher.
Not only technical analysis but also taking into account fundamental trends of world markets is necessary for successful currency pairs trading. When the volatility of the pair is high, the effective work may consist of the accuracy of entry in small time intervals. Like any activity connected with trading at the exchange, working with forex assets requires not only deep knowledge but also a certain type of character.
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